The Solana vs. Hyperliquid Debate | David Schamis Full Interview - HYPERLIQUID STRATEGIES INC

David so good to chat with you today ladies and gents we're here with David who you've definitely seen we were just listening to the beginning of Jeff the Hyperliquid legend living legend years ago crazy things are happening here in Singapore it is token week David thank you for making time to chat to us today I really appreciate it of course we're going to talk about many things Hyperliqid that's Solana versus Hyperliiquid which is the debate thing you just had with Kyle Somani. I want to ask you about this topic of new finance, which is sort of raging on at the moment. But let's start with the debate. Who won? You know, I don't know if anybody won. I was prepared for anything. Kyle is an animated guy. I think, you know, like a lot of people, though, he's probably a lot more polite in person than he is on Twitter. Twitter brings out the best in all of us. But I think it was pretty friendly and pretty polite. But look, my argument was Solana is great for a lot of things. Hyperliquid's really, really good for one thing, which is finance, which running an exchange for assets on chain. And it's extremely good at that. It's designed for that. And I think that the level of performance Hyperliqid has achieved in a relatively short period of time with a relatively small number of people it's just just amazing it really is it's phenomenal we cover hyperliquid as the clear leader in the perps race very often at solana floor our regular listeners will know that the open interest gap is just immense and we often talk about this sort of fragmented but growing purpose seen within the solana ecosystem yeah so what's your honest take on whether or not solana as a sort of general purpose ecosystem versus hyperliqid is this hyper specialized very successful entity, Solana's ability to close that open interest gap, is it feasible? Is it a pipe dream? What's your take? Look, I'm obviously biased. So I'm obviously pro Hyperliquid. I think, frankly, it's less about Hyperliqid versus Solana. And it's more about the builders on top of it that are able to attract liquidity. When you talk about real world assets on Hyperliiquid, we generally talk about Hyperliquid. But a big part of the story is trade XYZ, right? Because it's not like, you know, I think a lot of people in crypto make the mistake all the time that if you build it, they will come. And it's Not the case, right. Trade XYZ is not the only hip three builder doing this stuff on hyperlocal right now. There are many of them. Some are already have already come and gone. But they're the most successful by far. And it's because it's more than just building your company, you got to go out and get these customers, you got To get market makers, you gotta have people confident in the thing you've built, etc so you know like everything there's a technical side to this and there's a non-technical side to it and you have to make it both work and in a lot of ways i think um in the in the end first of all in the end it's not one or the other i think both will be super successful uh blockchains for many years um but whether it's spot on solana or perps or whatever whether you whether you to answer your question whether solana closes that gap on perps is probably less of a question specifically about solana and more about whether you know the next whatever Jeff Yan level builder decides to do it on Solana. Very interesting, very diplomatic response. I didn't hear a yes or a no. There is no yes or no. Like, can it happen? Yes. Will it happen? I really don't know. Okay. But it sounds like for the time being, you're not particularly worried about Solana closing that gap or it turning into a sort of head-to-head situation of an entire ecosystem competing in perps versus hyperliquid. You seem fairly confident where you well right now? Look, I would say, yes, very confident. That's absolutely true. But you look at the number of or the dollars of RWAs that trade globally off-chain versus the amount on-chain. Like, this is not about fighting for that little tiny drop in the bucket. Exactly. It's about getting more of this stuff on-chain. So if you told me five years from now, 10 years from now, that the amount of real-world assets trading on Solana will be up, I'm making up numbers, 50x from where it is now. It is up 50x, I think, in the last 12 months or something. If it's up 500x, you can get my point. If it is up a lot, monumental amounts between now and then, that is probably also a good thing for hyperliquid. That probably does not mean that Solana is completely hyperliqua's launch and hyperliqa is gone. It means more RWAs in general are trading on-chain. People are comfortable with it. And I always say markets like choices. You know, someone might like doing what, you know, is built on Solana one day, and someone might lack doing what's on Hyperliquid, and that's okay. Markets like choices, and, you Know, liquidity can move between the two, and it's all good. Interesting. So no tribalism. That's a happy report. Oh, yeah, definitely tribal. No doubt. I mean, if I had to pick one, Hyperliqid's going to win. Okay. There's definitely tribalism, but again, I don't think this is a winner-take-all thing. Gotcha. I really don't. Okay. Let's do a bit of a victory lap. Yeah, I'd love to. You guys have accomplished incredible things, incredible leadership, small, lean, agile team. Things are changing very fast, but also what you've accomplished is just, I mean, it's phenomenal, right? So what's your take on where you are right now, the key achievements, the Key Milestones? Give us a bit of a victory lap, sort of an elevator pitch of why someone should be paying attention if they're not. For better or for worse, we made the right call a year and a half ago to do a DAT for Hyperliquid. We had the idea when you looked around at sort of the 2025 summer of debts, which it was, that everybody was trying to be the next Michael Saylor. And, you know, the obvious choices in no particular order were Bitcoin, Ethereum, Solana. And we and I had no interest in being the next Mike. Michael Sayler. But we did convince ourselves that hype needed a debt. It's not easy today. It was even less easy. it was harder back then to just get hype exposure if you weren't someone comfortable owning a token on a decentralized exchange right the ticker is purr our ticker's purr per um so that premise i think turned out to be very right and frankly today i think we're still sort of reaping the benefits of that making a good decision the good news is you know we're one of the few dats trading in a premium still knock on wood changes a lot um and we're able to sort of generate value for our shareholders based on making that call a year and a half ago. That's the good news. The bad news is that won't last forever, right? For as long as that will last and it continues today, it won't last forever. And if we want to continue grading at a premium, if we wanna continue to be something that we add value to the ecosystem rather than being a drag on the ecosystem, we need to do more than just be a debt for the rest of our lives. We're working hard on doing things. We haven't done anything super material. You know, we're a validator on the hyperliquid ecosystem. That's all good. It generates some money. It doesn't generate enough to justify, you know, a high multiple. So we're working hard to do other things. Okay. So people that are critical of that might say, you're trading at a premium. That is great. MNAVs have been compressed when asset prices crash. It creates this sort of overhang of potential systematic threats. because if you know you have a spiraling price situation then downwards pressure from selling the asset and you get the point what is the sort the sort of financial alchemy if you will uh that's the language the tractors might use a word that's a word what is the financial alichemy that you might be forced to engage in uh to maintain that premium that you're trading at the moment so first of all i think that's a little bit i mean i'm not accusing you of being dramatic but that that people are dramatic It is a question. People ask that question all the time. I think that question is a little bit overly dramatized. I agree. I think, and again, Hyperliquid is a perfect example here. The Hype token is a perfectly example. There are people that are happy owning the token directly. There are other people that want to own the token through our debt. The movement of those people going in and out one direction or the other is shown, is generated through our MNF. When our MNAV is high, people are moving in, and a higher percentage of the total ownership will be owned through our debt. When it's low, we'll be selling, and it'll be out. As far as creating any sort of product, we're not going to create any massive problem. If we're selling, we'RE selling. People sell every day. If we sell too much and it goes down, someone should buy, and that's the benefit they're getting. I think we're over-dramatizing the regular, normal buying and selling, and over-Dramatising holding something in one bucket versus holding something on the bucket. And that's really all this is. If you think it's going to go down too much because we might sell one day, well, maybe it went up too much, because we bought too much one day. That's just the buying and the selling of assets, and let's not get too excited about it. So I think people are concerned about this, rightly or wrongly, they point to MNav compression, prices going down. spiraling effect but they'll say it's not even theoretical it's happened in the past i mean look at uh bit mine price for a while it was about 12 billion dollars when i was taking all the water i mean people were panicking people were saying if he then dumps it eth is going to be in an even worse situation probably looking at being stuck below two thousand dollars in assets yeah a piece so question to you is then you mentioned bitcoin is soul hyper hype is obviously in there is there there an asset type or an ecosystem that's best suited for DATs? Best suited for that success? Do you think about it in those terms at all? Yeah, look, I would come back to my point about last summer. Of those four, I certainly think, you know, look where the one's best for Dats as an ecosystem, I'm not sure is really the question. To me, the question is who needed another DAT, right? Like MicroStrategy is not going anywhere. MicroCell is not going anywhere. That's here to stay for a long time. The question really is, in the summer of 2025, who needed another debt? Did we need another Bitcoin debt? I don't think so. Whatever. There's a lot of them now, and they traded multiples or whatever. But if we didn't need another one, we clearly needed a hype debt. Now, I'm biased right now. I don'T think we need another one. Ours is fine. But clearly, you mean because the demand came in? Yeah, the demand came in, and the fact that even today we're trading at a premium, knock on wood, when so few DATs are, shows that the world still needs us to do what we're doing. We're solving a problem, we're creating value for an investor in one way or the other. Let me flip that question. Is there an ecosystem or a asset type that is least suited for DAT? Um, there are clearly too many deaths, you know, probably in descending order in the Bitcoin, Ethereum, Solana world. There are obviously too many of them. I think over time, the number will go down. They will either die natural deaths, which is, as you say, the MNAV will go down, will be well below one. Their boards will be forced to liquidate and buy back their stock, which is what they should do, by the way. And that'll happen over time. I think we'll get to an equilibrium of much less in those three tokens. Another possible outcome, it sounds like, is mergers and acquisitions, aggressive mergers, aggressive acquisitions. Do you think that's going to play out in any ecosystem? I sort of hope so. I mean, I have to say, like, doing M&A is like the job I was doing for the last 30 years of my life. I didn't know much about running a DAT two years ago, but I knew something about M&H. I would love to buy a DAT well below one times MNAF and either hold the tokens or do whatever. Would you buy a distressed Solana DAT? I would like to. The problem is I'm not sure I'm going to have that opportunity. Because if you're the board of a distress, let's just make up some numbers. Let's say a Solana Dat is trading at 0.5 MNAV. Let's see. We're trading at 1.1 MNA. We're making up numbers. And we show up and we say, we'll buy you guys for 0.6, some premium to where you're trading right now, and we'll do it in a stock-for-stock deal. We would love to do that. That sounds great. But the board would have to sit there and say to themselves, OK, why are we doing this and not just selling our tokens and buying back our stock? Now, there may be some reasons, right? And taxes are a big one, right. And if that Solana debt question is both trading at a big discount, but also has a large deferred tax liability, there's sort of a locking cost. And that is a possibility where a merger, meaning doing something I talked about, might actually make more sense than just liquidating. Because when you merge, we inherit that tax basis, we don't have to pay taxes. When you sell your tokens, you have to the pay the taxes as a seller. Now, I don't mean to be a jerk. I don't think most Solana dApps right now have big tax, deferred tax liabilities. They might have the opposite because Solana has been down. So like today, like right now, I'm not sure I can see why a board would choose to just do a merger with us rather than sell their tokens. But look, what do I know? Like different people have different opinions and that's what makes a market. And if someone's interested in that, please call me because again, that's something I know something about. This dApp thing, I'm still learning. All right, choices are good in the market. Choices are good. David would love to buy your distressed debt. This is good. I would love to do it. All right. I want to ask you about this idea of new finance. And the preface to the question is, 10 years ago, PayPal launched this campaign about new money, right? Now we think of it as crypto. It's fast. It's cheap. It's sort of decentralized. It's peer-to-peer. It's immutable. All these kind of things. But when it first came out, it was just digital money. And you could sort of one-click send it from one person to another. It was great. It was revolutionary. Now, you know, it's 2026, the end of token 2049 here. Insane amounts of innovation. Financial innovation is happening on-chain. Trillions of dollars are eyeing the sort of on- chain world and saying, where can I allocate capital, right? So we've moved from new money to new finance. Yep. But what does new finance even mean to you? Look, I think what it means, first of all, your first point is great. Like, the first innovation crypto did for the world, and it's still happening, right, this Western Union still exists, right. So the first thing that crypto did for the world was allow money, value, cash, USDT, whatever, to move around much quicker and much cheaper than ever before. And that is of tremendous value. And I got to tell you, I don't know what the sort of worldwide penetration that is right now, but there's still plenty of room to run, right? Like that's, there's plenty of room to write on that. One of the ways that sort of manifests itself over the years was in Bitcoin just going up in value a lot. And Bitcoin, in my opinion, and many other people's opinion, is really just a digital gold. Bitcoin's gold in the digital world and what it's worth, I really have no idea. I don't have any more opinion on Bitcoin than I do on gold. Today, as you say, now in 2026, and what we're seeing recently, to me, is less about the ability to just move money around, which is still great, but being able able to improve upon the rails we've known all these years, and exchanges are a perfect example, and hyperlink is a perfect example, to improve on the things we've had all these years by using crypto rates. So the rails, we built to move money around quickly. The rails we built because we wanted to move digital gold around, Bitcoin. Now we can use them for more things, and trading real world assets, trading oil on the weekend when the Iran war started, that was pretty valuable. needed that liquidity. People wanted to find the right price. Pre-IPO equity trading. This is a soapbox I've been on for years. Before anyone knew what Bitcoin was, I've Been crowing about how the investment bankers give too much to the buy side in the IPO process. I'm a longtime private equity guy. We IPO our companies. Of course, I don't think the price is ever high enough. And I think too much has gone to the Buy side. 15 years ago, 20 years ago I was carrying on about this stuff um i expected it to be solved one day did you think it was going to happen on chain i had no i i didn't know you know i knew it would be solved when day before before i knew what the hell chain was before anyone knew what on chain was and um i don't think necessarily even when i got to know crypto and bitcoin and on chain did i think the obvious this there was an obvious solution for the ipo discount but it is and i couldn't be happier about it very My favorite picture, I tweeted about this a number of months ago, but when the Cerberus IPO happened, Morgan Stanley, I think it was Morgan Stanley was on their trading floor. One of the board members of Cerberis was on there, took a picture of him standing there on the Morgan Stanley trading floor, behind him, there was a screen, it was a Bloomberg screen, and in front of the Bloomberg screen was the hyperliquid screen. So some equity capital markets guy at Morgan Stanley while they were pricing it was looking and see where we're trading on hyperliquid. That's kind of cool. Yeah, it's on my, if you look at my Twitter feed. Yeah, do you think that's because there's an information asymmetry or was he actually just trying to trade on the side? No, he was trading on the sideline. I highly doubt anyone was trading on the slide in New York on the Morgan Stanley trading floor. That would not be a career advancing move for a Morgan Stanley guy. Well, now that you've tweeted it, his career might be over. Yeah, exactly. But I think that it was information. People always want to get the information. And even though they still price the Cerberus IPO, well below the Hyperliquid price. They want to know where it was trading on Hyperliqid. How can you not want to? Very interesting. And, you know, again, I posted a chart about this. But, you Know, it was sort of trading along the way on pre-IPO. Then the IPO was priced like here. And it kept trading, you Now, post-IPo on the equity markets. Like Hyperliiquid did a really good job of predicting where it were trading. It was almost a straight line. SpaceX, same story. There have been a number of others. I was tweeting, I was sort of yelling at Elon on Twitter saying, you're leaving money on the table, dude like Hyperliquid's telling you your SpaceX IPO should be done at a much higher price than $135. I was very worried that Elon was leaving money on the tab and God knows he's not rich enough so I was trying to help him out I'm sure he's very appreciative I know, I can imagine He didn't take my advice He should reach out to us Very, very exciting use of you know, finding more data that is available on chain. Prediction markets is another one of these things that falls under the umbrella category of new finance around major geopolitical events, general elections in particular. Prediction Markets have been very, very good at figuring out the odds of something happening or not happening. Pre-IPO, PredictionMarkets, which one of those or something entirely would you say is the most exciting development when we think about new finance? It's hard to rank all these things. Look, I agree that your prediction markets are great. I don't think I've ever placed a bad investment, whatever you call it, on CalSheet or PolyMarket in my life. But I'm on those websites all the time because I think it's super interesting to look at. And, you know, I want to know what the world thinks the likelihood of the Democrats and Republicans taking the Senate next month. So I spent a lot of time there. I think It's super valuable. That's the good news. The bad news is I think prediction markets look pretty small. And by the way, when you carve out the sports part of it, like sports betting is not new, right? That's been around a very long time. It's huge. If you carve that out, what's left is actually really small. I'm hoping it grows. I think I'll now be a little tribal. I think that part of the reason that hasn't grown as much is I don't think the trading experiences on Cal State or Polymarket are particularly great. You know, the fees are certainly a lot lower than it was, you know, with a bookie, you know, 50 years ago or 20 years ago when people traded sports and the guy broke your legs when you didn't pay. Like, that's moved in the right direction. But fees are still pretty high. And I think that the sort of professional trading experience that, you Know, many, you know, of the world's professional traders are used to today doesn't exist in those venues. And I Think Hip4 is a way to make that happen. And I hope it does. So exciting. I put that, I guess, high on the list. Do I think it's ever going to be close to the equity markets or the option markets? That'd be great if it was. I think that's a long put. Let's put it in golf terms. Okay. And what do you think is holding back this concept of new finance from, you know, it's separating it into its constituents. I think people often think DeFi versus TradFi or DeFi plus TradFi sort of merging. Some people love it. Some people don't love it, but you know if you sort of boil it down to its whole in its entirety, new finance, what's holding it back from broader adoption? It was interesting. After our panel that we just had, Jeff Yan was on his panel, and the interviewer, Shander, brought up the point that Jeff has said in the past, it's not new finance versus old finance. It's not on-chain versus off-chain finance. Not deface. It just finance. And finding better, faster, cheaper rails is not is not new for crypto right like people have been doing that for many many years when i started my career equity still traded in in in fractions uh you know traded you know eighth of a point and it was a big deal i think when it went to a 16th of a points and then all of a sudden it was decimalization and people said oh my god this is crazy um so like this this has been going on for a long time well before crypto crypto is just the latest technology that advances the ball further and i think it is advancing the ball further and faster than any of us thought would happen beforehand. But it's just a continued evolution. And again, I really hope five years, 10 years from now, whatever, we're not talking about on-chain finance versus off-chain financers. We're just talking about finance. And liquidity is going to the best rails with the lowest costs and the highest volumes and best execution. So final question before we let you go, in the interest of time, people that consider themselves DeFi natives, degens even, might have a very strong opinion of this, and people that come from a TradFi world and build on DeFi, likewise, would probably have a strong opinion of this. If we agree with this idea that Jeff's also suggesting, it's just finance, if there is arguably no separation in the future between DeFi and TradFi, does DeFi not then have to sort of sell its soul, in a sense, or lose its core ethos of decentralization and disintermediation? Does it not just all become money moving around? Are we not then not talking about new finance, but actually just talking about new money? Have we not gone full circle? Yeah, I don't think it's surely that's enough to lose its core, its base. I think that if volumes and trading moved to DeFi in a big way, which we all think well, you and I certainly think well. It's not because people have some romantic view of DeFi. And it's all about, we only want to trade with things are decentralized. It's, you know, some crypto degens might feel that way. But the broader world is not going to feel thatway. The broader world, again, they want to go where execution is best, fees are least, volumes are highest, etc. And if that happens to be in a DeFi world, that's where they're going to go. And it's that happens in the old rails, because somehow, you know, CME gets their act together and figures it out and gets a kick in the ass from hyperliquid and does it better than hyperliqid does, they'll stay there. And that's okay. Like that's, that how this evolution works. I know what I'm betting on. I don't think the winner of this whole thing is going to be who creates the most beautiful, architecturally designed, decentralized thing 15 years from now, right? That's part of it. It's a nice part of It's not the whole story. Gotcha. David, Hypliquid Strategies, thank you so much for your time. I really appreciate it. Thank you. Great job. Thank you